Meta’s Reality Labs division lost another $4 billion in Q1 2026, bringing its total losses since 2021 to $83.5 billion, even as the company shifts more attention and spending toward competing with AI leaders such as OpenAI and Anthropic.
TL;DR
- Meta lost $4 billion on Reality Labs in Q1 2026.
- Reality Labs has lost $83.5 billion across 21 quarters since 2021.
- Meta’s 2026 spending is projected between $125 billion and $145 billion.
- The company is also investing heavily in AI infrastructure and talent to compete with OpenAI and Anthropic.
Meta is still burning through billions on its augmented reality, virtual reality, and metaverse ambitions, even as the company’s biggest strategic race appears to be shifting toward artificial intelligence.
According to Meta’s latest quarterly earnings, Reality Labs, the division behind its AR glasses, VR headsets, and VR software, lost $4 billion in the quarter. While that figure is massive on its own, it has become almost routine for Meta. Over its last 21 quarterly earnings reports since 2021, Reality Labs has lost a total of $83.5 billion, averaging around $4 billion in losses every quarter.
That spending comes as Meta is pulling back from some of its earlier metaverse ambitions, while preparing to spend even more aggressively on AI. The company is now trying to stay competitive with AI leaders such as OpenAI and Anthropic, making its capital spending outlook a key point of concern for investors.
Meta projected that it will spend between $125 billion and $145 billion in 2026, a figure that reportedly exceeds analyst expectations and the company’s own earlier estimates. The spending is tied heavily to infrastructure, especially as AI products demand more compute power, memory, and data center capacity.
“We are increasing our infrastructure capex forecast for this year,” Meta CEO Mark Zuckerberg said on a public call with investors on Wednesday. “Most of that is due to higher component costs, particularly memory pricing. We are very focused on increasing the efficiency of our investments.”
Meta’s core business remains strong enough to fund these bets. In the first quarter, the company reported net income of $26.8 billion, up 61% year-over-year, while revenue rose 33% year-over-year to $56.3 billion. However, the size of Reality Labs’ losses, combined with growing AI infrastructure costs, has raised questions about how much Meta can continue spending across both frontiers.
The AI race is also getting more expensive from a talent perspective. Meta reportedly poached more than 50 AI researchers and engineers from competitors last year, helping the company ship its overhauled AI model, Muse Spark, earlier this month. Zuckerberg said Meta AI has seen “large increases” in usage since that release, but the cost of building and maintaining AI products continues to rise.
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“We aren’t providing a specific outlook for 2027 capex, and we are, frankly, undergoing a very dynamic planning process ourselves as we’re working through what our capacity needs will be over the coming years,” said Meta CFO Susan Li. “Our experience so far has been that we have continued to underestimate our compute needs.”
Despite strong earnings, Meta’s stock fell more than 5% in after-hours trading, signaling investor unease over the company’s dual spending commitments across AR and VR and AI. For now, Meta appears willing to keep funding Reality Labs while also escalating its AI investments, but the pressure to prove returns from both strategies is growing.
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